Keep in mind Labor cost is only one part of the puzzle, it depends a lot on what you are manufacturing. In large heavy industries (Metals, chemicals, plastics e

Keep in mind Labor cost is only one part of the puzzle, it depends a lot on what you are manufacturing. In large heavy industries (Metals, chemicals, plastics etc) the raw materials costs can dwarf the labor cost by a significant amount. Obviously the story is different for lighter manufacturing (component assembly etc) where labor costs probably do make up a higher proportion of overall expenses. An example from the industry I'm familiar with - Steel: The raw materials which go into manufacturing steel; iron ore and coal are such a huge portion of the operating costs that labor expenses almost look like a rounding error next to it when you tabulate out the expenses. A lot of heavy industry is similar (Aluminum has added expense that it required large amount of electricity which is why traditionally aluminum smelters have been linked to hydro sites). If you can improve yield (ratio of raw materials consumed to product produced) by even a small margin you can justify your salary many times over which lends support to the idea you want to be employing smarter people not necessarily less people. Here is Australia what has rocked my industry is falling demand, largely driven by GFC which has led to a sudden decline in new commercial and residential construction etc. (It is starting to recover now but is pretty staggered). As well as increased completion from imports. I haven't seen any data supporting this but what I keep getting told is that in some cases Chinese government heavily subsidizes their industry so they can export at what would otherwise be a loss. This is called "Dumping" and is a form of predatory pricing the idea being you flood the market with very cheap goods then raise prices when competition is driven out of business. There is evidence this is happening to the US as well here is an article I found from Jan this year (http://www.cnbc.com/2017/01/18/us-affirms-finding-of-china-steel-plate-dumping-subsidies.html http://www.cnbc.com/2017/01/18/us-affirms-finding-of-china-s...) If I wanted to stimulate manufacturing I'd focus on demand (i.e government funded infrastructure projects) and trade policy (Better anti-dumping legislation etc).